![]() As mentioned before, staking is when you pledge your coins to a smart contract on the blockchain, and thus become eligible to verify transactions and get rewarded for it. So the proof-of-stake model allows owners of a crypto to essentially ‘stake’ their coins and hence be able to create their own validator nodes. These validators or ‘stakers’ – put their cryptos in a smart contract that is held on the blockchain itself. It is the process whereby participants agree to lock up an amount of the crypto in exchange for a change to validate new blocks of data that is to be added to a blockchain. So to enable the system to choose a validator out of the hundreds of, a system of staking is adopted by the proof-of-stake consensus – hence the name. While, validator is the term specific to PoS – and refer to those who get the chance of validating the transaction based on how much that have staked on the network.īut this functionality in a proof-of-stake consensus mechanism is achieved by something called ‘staking’.Īdditional Read: Ethereum Merge Update What Is Staking? Miner is a term specific to PoW, and refer to those participants who compete to validate the transaction on the blockchain and hence be able to ‘mine’ the coin. While on the other hand, PoS eliminates the entire competition factor and directly chooses which ‘validator’ who performs the function – thus cutting the energy consumption by over 99%. Thus, while PoW is considered as a more decentralised way of performing the consensus mechanism functions, it consumes a tremendous amount of energy as every ‘miner’ which is connected to the network will try to compete with their computing power to solve the problem and out of them only one will get it. The PoW mechanism works in a similar way with one slight difference – the code doesn’t choose a particular participant to validate the data, rather whoever is able to quickly solve a complex mathematical complication is gets the benefit of validating the data. Those who get chosen to complete the transaction – they get rewarded with a newly mined crypto if they accurately validate the new data and don’t cheat the system. The only place PoS differs from PoW is in PoS, there is a mechanism which chooses which participants on the network get to handle this task – which has a lucrative benefit to it too. Since blockchain lack any centralised authority governing the system – PoS is one of the methods used to ensure that every data saved on the network is valid. So proof-of-stake (PoS) is essentially a type of consensus mechanism that is used to verify new transactions happening over the blockchain network. Simply speaking, in the world of crypto and blockchain – a consensus mechanism is the way means of which new transactions are verified on the distributed ledger. It is thus very useful in record-keeping, something that is crucial in a blockchain system. According to definitions, a consensus mechanism is nothing but a fault-tolerant mechanism that is used in computer and blockchain systems to achieve a sort of agreement on a single data value on the network among distributed processes – such as cryptos. This are essentially two of the most popular kinds of ‘consensus mechanisms’ used by most blockchain networks in the worldīefore we get into the nitty gritty of what proof-of-stake exactly is, let us first understand what a consensus mechanism is. ![]() To clear your confusion – proof-of-work is abbreviated as PoW while PoS is the abbreviation of proof-of-stake. Is proof-of-stake better than proof-of-work?Īs on 4 August, about a month and a half away from the impending Ethereum Merge – if you are a crypto novice, you might be hearing words like proof-of-work and proof-of-stake being thrown around a lot.Why is Ethereum shifting from PoW to PoS?.How does Ethereum's proof-of-stake work?.Can Bitcoin Be Converted to Proof-of-Stake?.Which Blockchains Use Proof-of-Stake (PoS)?.Pros & Cons of Proof of Stake in Crypto.How Is Proof-of-Stake Different From Proof-of-Work?. ![]()
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